The Road to Centralization - Building a better relocation program By Beth McGuire
Orchestrating perfect corporate relocations can be challenging enough. Balancing cost effectiveness and employee satisfaction across a large, decentralized environment—especially one cluttered with several different programs and policies—can prove almost overwhelming.
Such was the case for Philips Electronics. As one of the world’s largest electronics companies, Philips had grown significantly in recent years through mergers and acquisitions. But what had been good for overall business growth proved a detriment to workforce mobility, resulting in a loose and decentralized relocation program.
“While there was an effort to create a single relocation policy for all of Philips’ companies, it really wasn’t being followed,” explains Gwen Black, director of relocation and recruitment for Philips. “Some companies didn’t use any sort of policy at all, so the suppliers were, in some cases, doing each relocation on an ad hoc basis.”
The result, Black points out, was minor chaos: confusion among the ranks, costs and exceptions not being accurately tracked, and recruiters debating relocation benefits with hiring managers. Employees who transferred between Philips’ companies were often upset to learn that their new relocation benefits didn’t stack up quite as tall against the ones they’d previously enjoyed. Increasingly, it became easier to hire from outside the company than to relocate an internal candidate because of the endless negotiation that would result.
At the same time, Philips’ purchasing group put relocation under the microscope, looking at the total spend on employee mobility and seeking opportunities for leveraging greater cost savings.
Setting the Goal
The time had come for change, and Black’s objective was to unite all of Philips’ U.S. companies—including Medical Systems, Lighting, Consumer Electronics, Domestic Appliances and Semiconductors—under one single relocation policy.
“Philips has a remarkably strong brand worldwide, and we wanted to promote a strong brand internally as well,” says Black. “We knew the first step was building a business case for why it was important for Philips to have a single relocation policy.”
In order to craft an effective policy, Black sought the advice of outside consultants who would come to the table with no vested interests. But before that took place, she wanted support across all of Philips’ business units for the idea of a single policy. This would require a project team made up of strong stakeholders from each of the business units, particularly those units where the most issues existed.
Developing the Plan
Once the team was in place, and members informed of their responsibilities, a project plan was devised. The plan called for getting agreement on a single policy, then developing the policy, presenting this policy to each business unit, and selecting a relocation vendor to support the policy. Working in tandem with outside consultants, the team spent the better part of the following year constructing the policy, getting it right and getting the required agreements.
Beyond the single policy, the project team also tackled the question of which service delivery model would work best: centralized or decentralized. Even though the popular opinion was that centralizing the program would represent a marked improvement over the current, decentralized environment, the team debated the merits of both options. This way, no one came to the table with the preconceived notion that it had to be centralized.
“Giving the team the flexibility to fully explore both options enabled us to come to the unanimous decision that a centralized delivery system was the better way to go,” says Black. “This made them feel better about going back and selling the idea to their business units.”
Once buy-in on both a single policy and a centralized program was received, the team worked to develop an RFP to identify vendors. An initial list of 17 vendors was reduced to three, with Weichert Relocation Resources Inc. (WRRI) eventually being selected as sole provider.
“In the end, we came in just under the wire, since we’d already committed to a January 1, 2006 start-up date,” says Black. “WRRI did a great job of helping us meet that deadline so that the program could be implemented on schedule, but we could still go back and fine-tune some of the policy details, such as how many days for house hunting trips.”
A Success Story
One immediate advantage of the centralized model is that Black and her team now have one central location to capture policy exceptions, allowing them to identify the true cost of these exceptions and gauge at what point it makes sense to refine policy.
“Another improvement was adding tiers to our policy,” says Black. “We now have levels that easily accommodate every type of employee, from VIPs to technicians from our medical supplies company. We’ve also built a provision into the policy that gives employees the option of accepting a lump sum, which seems to work much better for everybody.” |
